Friday, January 29, 2016

A Gunnar Myrdal Lecture in 1966

Gunnar Myrdal (1898–1987) gave this lecture at the University of California, Los Angeles (UCLA) in 1966 about the US, Europe, and international development in the Third World.

Gunnar Myrdal was a much underrated economist, and so much so that G. L. S. Shackle – whether rightly or wrongly – judged that “had the General Theory never been written, Myrdal’s work [sc. Monetary Equilibrium 1931] … would eventually have supplied almost the same theory” (Shackle 1967: 124) (see this post here).

It is interesting what Myrdal says here:

(1) he argues that the developed world in 1966 should liberalise its economies to Third World imports and allow outward capital flows into the Third World;

(2) however, the Third World should maintain its protectionist stance and stop First World imports from crippling its infant industry.

(5) he discusses the Marshall plan, and how it benefited Europe, as well as the emergence of the European Economic Community (EEC). Myrdal argues that the West should have given Marshall-style aid to the Third World for development purposes.

(6) Myrdal points out that national and linguistic differences in Europe impede its economic integration. And Myrdal appeared to think that Britain should not have joined the European Common market on economic grounds.

(7) Although Myrdal seems to have approved of the European Free Trade Association (EFTA), he had some harsh comments on the anti-democratic nature of the emerging European Economic Community (EEC)! (from about 42.00). How topical!

At 43.29–43.43 Myrdal even says:

“I have said before and I want to repeat it now: that no American senator – living or dead – could ever have thought of voting for the United States joining a supranational, bureaucratic and un-democratic organisation like the EEC.”

Dubious advice too. For example, how can you build an industry warbling frambles if you cannot import cheap frambles? Or even cheap cars to move the frambles about?

Anyway, as for this:"(5) he discusses the Marshall plan ... argues that the West should have given Marshall-style aid to the Third World for development purposes."It's still not too late. I am pretty skeptical of most foreign aid as practiced, since it usually comes with buy-back caveats, empowers bad government, and is deeply wasteful (Easterly, Moyo), but it's hard to believe that it just cannot work -- not after the Marshall Plan. But it absolutely has to be severed from the requirement to buy back specified stuff from the "donor" nation.

Prateek, it could be a win-win situation actually. What's important is that the imported goods produced by foreign workers are bought and used by domestic companies (for production) instead of domestic consumers.